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Case 3:16-cv-01443-SI Document 46 Filed 01/17/18 Page 1 of 17

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

FATHERS & DAUGHTERS NEVADA, Case No. 3:16-cv-1443-SI
LLC,
OPINION AND ORDER
Plaintiff,

v.

LINGFU ZHANG,

Defendant.

Carl D. Crowell, CROWELL LAW, PO Box 923, Salem, OR 97308. Of Attorneys for Plaintiff.

David H. Madden, MERSENNE LAW, 9600 SW Oak Street, Suite 500, Tigard, OR, 97223. Of
Attorneys for Defendant.

Michael H. Simon, District Judge.

Plaintiff Fathers & Daughters Nevada, LLC (“F&D”) brings this action against

Defendant Lingfu Zhang. F&D alleges that Defendant copied and distributed F&D’s motion

picture Fathers & Daughters through a public BitTorrent network in violation of F&D’s

exclusive rights under the Copyright Act. Before the Court is Defendant’s motion for summary

judgment. Defendant argues that F&D is not the legal or beneficial owner of the relevant

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exclusive rights under the Copyright Act and thus does not have standing to bring this lawsuit.

For the following reasons, the Court grants Defendant’s motion.

STANDARDS

A. Summary Judgment

A party is entitled to summary judgment if the “movant shows that there is no genuine

dispute as to any material fact and the movant is entitled to judgment as a matter of law.”

Fed. R. Civ. P. 56(a). The moving party has the burden of establishing the absence of a genuine

dispute of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The court must view

the evidence in the light most favorable to the non-movant and draw all reasonable inferences in

the non-movant’s favor. Clicks Billiards Inc. v. Sixshooters Inc., 251 F.3d 1252, 1257 (9th

Cir. 2001). Although “[c]redibility determinations, the weighing of the evidence, and the

drawing of legitimate inferences from the facts are jury functions, not those of a judge . . . ruling

on a motion for summary judgment,” the “mere existence of a scintilla of evidence in support of

the plaintiff’s position [is] insufficient . . . .” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252,

255 (1986). “Where the record taken as a whole could not lead a rational trier of fact to find for

the non-moving party, there is no genuine issue for trial.” Matsushita Elec. Indus. Co. v. Zenith

Radio Corp., 475 U.S. 574, 587 (1986) (citation and quotation marks omitted).

B. Standing Under the Copyright Act

“Under the Copyright Act, only the ‘legal or beneficial owner of an exclusive right under

a copyright’ has standing to sue for infringement of that right.” Righthaven LLC v. Hoehn, 716

F.3d 1166, 1169 (9th Cir. 2013) (quoting 17 U.S.C. § 501(b)).1 The “exclusive rights” that can

1
Section 501(b) states: “The legal or beneficial owner of an exclusive right under a
copyright is entitled . . . to institute an action for any infringement of that particular right
committed while he or she is the owner of it.”

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be held under the Copyright Act are enumerated in Section 106. “They are the rights ‘to do and

to authorize’ others to do six things with the copyrighted work: to reproduce the work, to prepare

derivative works based upon the work, to distribute copies of the work, to perform the work

publicly, to display the work publicly, and to record and perform the work by means of an audio

transmission.” Minden Pictures, Inc. v. John Wiley & Sons, Inc., 795 F.3d 997, 1002 (9th

Cir. 2015). This list of exclusive rights is exhaustive. Id. It does not include the right to sue for

infringement. See Righthaven, 716 F.3d at 1169 (“Absent from the list of exclusive rights is the

right to sue for infringement.”). Thus, a copyright holder cannot assign or transfer a bare right to

sue. Id.; see also DRK Photo v. McGraw-Hill Global Educ. Holdings, LLC, 870 F.3d 978, 987

(9th Cir. 2017) (holding that the substance and effect of the assignments and agreements

purporting to assign ownership were “merely a transfer of the right to sue on accrued claims,

which cannot confer standing” under the Copyright Act); Silvers v. Sony Pictures Entm’t,

Inc., 402 F.3d 881, 890 (9th Cir. 2005) (“The bare assignment of an accrued cause of action is

impermissible under 17 U.S.C. § 501(b).”).

Ownership, and how it can be transferred and parsed, is unique under the Copyright Act:

A ‘transfer of copyright ownership’ is an assignment, mortgage,
exclusive license, or any other conveyance, alienation, or
hypothecation of a copyright or of any of the exclusive rights
comprised in a copyright, whether or not it is limited in time or
place of effect, but not including a nonexclusive license.

17 U.S.C. § 101 (emphasis added). Thus, an owner of a copyright can transfer ownership of a

copyright “via an assignment or an exclusive license” and both “constitute a ‘transfer of

copyright ownership.’” Righthaven, 716 F.3d at 1170 (emphasis added) (quoting 17 U.S.C.

§ 101). “[I]f a copyright owner grants an exclusive license of particular rights, only the exclusive

licensee and not the original owner can sue for infringement of those rights.” Id. (emphasis

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added) (citing 3 M. Nimmer & D. Nimmer, NIMMER ON COPYRIGHT § 1202[C] (2012)); see also

J. Ginsburg & R. Gorman, COPYRIGHT LAW, Ch. 3.II.A (2012) (“Ginsburg”).

An owner of a copyright who transfers exclusive rights may still have standing to sue on

those rights if the owner qualifies as a “beneficial owner” of those rights. See Ginsburg, supra, at

Ch. 3.II.A. The Copyright Act does not define the term “beneficial owner.” “The classic example

of a beneficial owner is ‘an author who ha[s] parted with legal title to the copyright in exchange

for percentage royalties based on sales or license fees.’” DRK Photo, 870 F.3d at 988 (alteration

in original) (quoting Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1144 (9th

Cir. 2003)). “Beneficial ownership arises by virtue of section 501(b) for the purpose of enabling

an author or composer to protect his economic interest in a copyright that has been transferred.”

Broad. Music, Inc. v. Hirsch, 104 F.3d 1163, 1166 (9th Cir. 1997).

BACKGROUND

A. Sales Agency Agreement

F&D is the author and registered the copyright for the screenplay and motion picture

Fathers & Daughters. ECF 36-1. On December 20, 2013, with an effective date of April 1, 2013,

F&D entered into a sales agency agreement with Goldenrod Holdings (“Goldenrod”) and its sub-

sales agent Voltage Pictures, LLC (“Voltage”). ECF 36-2. Under this agreement, F&D

authorized Goldenrod and Voltage as “Sales Agent” to license most of the exclusive rights of

Fathers & Daughters, including rights to license, rent, and display the motion picture in theaters,

on television, in airplanes, on ships, in hotels and motels, through all forms of home video and

on demand services, through cable and satellite services, and via wireless, the internet, or

streaming. F&D reserved all other rights, including merchandising, novelization, print

publishing, music publishing, soundtrack album, live performance, and video game rights.

ECF 36-2 at 3.

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F&D further authorized Goldenrod and Voltage to execute agreements in their own name

with third parties for the “exploitation” of the exclusive rights of Fathers & Daughters and

agreed that Goldenrod and Voltage had “the sole and exclusive right of all benefits and

privileges of [F&D] in the Territory, including the exclusive right to collect (in Sales Agent’s

own name or in the name of [F&D] . . .), receive, and retain as Gross Receipts any and all

royalties, benefits, and other proceeds derived from the ownership and/or the use, reuse, and

exploitation of the Picture . . . .” ECF 36-2 at 4. The “Territory” is defined as the “universe.” Id.

The sales agency agreement sets forth how Gross Receipts will be distributed. ECF 36-2

at 6-8. There are eight enumerated payment categories, listed in payment priority order. The first

is costs of production, with a capped amount that is redacted in the copy provided to the Court.

The second is overhead and a producer fee equal to a lesser amount that also is redacted in the

Court’s copy. The third is a marketing fee to Goldenrod and Voltage. The fourth includes

recoupable expenses (which were previously defined) to Goldenrod and Voltage. The fifth

includes other described fees and costs. The sixth consists of certain payments to Goldenrod and

Voltage that are redacted in the Court’s copy. The seventh is box office bonuses or other

deferments not assumed by third party domestic distributors. The eighth is approved deferments,

which are redacted in the Court’s copy. After these eight specified categories, any remaining

amounts are to be considered “adjusted gross receipts.” The adjusted gross receipts are to be

divided in a manner that is wholly redacted in the document provided to the Court.

B. Distribution Agreement with Vertical

On October 2, 2015, Goldenrod entered into a distribution agreement with Vertical

Entertainment, LLC (“Vertical”). ECF 36-5. Under this agreement, Goldenrod granted to

Vertical a license in the motion picture Fathers & Daughters in the United States and its

territories for the:
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sole and exclusive right, license, and privilege . . . under copyright,
including all extensions and renewal terms of copyright, in any and
all media, and in all versions, to exploit the Rights and the Picture,
including, without limitation, to manufacture, reproduce, sell, rent,
exhibit, broadcast, transmit, stream, download, license, sub-
license, distribute, sub-distribute, advertise, market, promote,
publicize and exploit the Rights and the Picture and all elements
thereof and excerpts therefrom, by any and every means, methods,
forms and processes or devices, now known or hereafter devised,
in the following Rights only, under copyright and otherwise

ECF 36-5 at 3 (¶ 7(a)). The “rights” enumerated include: (i) theatrical rights; (ii) non-theatrical

rights, meaning prisons, educational institutions, libraries, museums, army bases, hospitals, etc.,

but expressly excluding ships and airlines; (iii) videogram rights, meaning videocassettes, DVDs,

blue-ray discs, CD-ROMs, and similar media; retail channels including “through standard retail

channels by means of download to any tangible or hard carrier Videogram storage device using

any and all forms of digital or electronic transmission to the retailer,” and internet based retailers;

(iv) television rights; (v) digital rights, meaning the exclusive right “in connection with any and

all means of dissemination to members of the public via the internet, ‘World Wide Web’ or any

other form of digital, wireless and/or Electronic Transmission . . . including, without limitation,

streaming, downloadable and/or other non-tangible delivery to fixed and mobile devices,” which

includes “transmissions or downloads via IP protocol, computerized or computer-assisted media”

and “all other technologies;” (vi) pay-per-view and video-on-demand rights; and (vii) incidental

rights. ECF 36-5 at 3-5 (¶¶ 7(a)(i)-(vii)). The rights granted also include the right to assign,

license, or sublicense any of these rights. Id. at 5 (¶ 7(b)).

In addition to reserving the rights to ships and airlines to Goldenrod, the distribution

agreement also reserves to Goldenrod the clip rights, stock footage, merchandising, soundtrack,

sequel, prequel, remakes, spin-offs, and royalties from retransmission and other collection

agencies. ECF 36-5 at 5 (¶ 7(c)(i)). The distribution agreement also purports to retain to

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Goldenrod the right to pursue for damages, royalties, and costs actions against those unlawfully

downloading and distributing Fathers & Daughters via the internet, including using peer-to-peer

or BitTorrent software. ECF 36-5 at 6 (¶ 7(c)(iii)). This clause purports to retain “the right to

pursue copyright infringers in relation to works created or derived from the rights licensed

pursuant to this Agreement.” Id. Shortly thereafter, however, Goldenrod and Vertical confirm

and agree that “Internet and ClosedNet Rights (and all related types of transmissions) (e.g.,

Wireless/Mobile Rights) shall be included in the Rights licensed herein)” as long as Vertical uses

commercially reasonable efforts to ensure security. Id. (¶ 7(c)(d)). Vertical was required to use

commercially reasonable efforts to ensure that Vertical’s internet distribution and streaming

could only be received within its contract territory, was made available over a closed network

where the movie could be accessed by only authorized persons, and could only be accessed in a

manner that prohibited circumvention of digital security or digital rights management security

features. F&D does not assert that Vertical breached this provision of the agreement or did not

use commercially reasonable efforts to ensure digital security or its territorial limitations.

Similar to the sales agency agreement, most of the financial information of the

distribution agreement also is redacted in the copy provided to the Court. ECF 36-5 at 8.

Nevertheless, it appears that Vertical was to receive certain fees and costs first, and then

Goldenrod was to receive certain monies. The term of the distribution agreement was from the

initial release date of Fathers & Daughters to certain triggering events that have been redacted in

the copy provided to the Court. ECF 36-5 at 3. F&D does not assert that this agreement was no

longer in effect at the time this lawsuit was commenced.

DISCUSSION

F&D asserts that it is both the legal owner and the beneficial owner of the copyright to

Fathers & Daughters, which would give F&D standing to bring this infringement suit against
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Defendant. F&D misstates the law of legal ownership of copyright exclusive rights and thus its

argument that it is the legal owner of the exclusive rights at issue in this lawsuit is rejected. F&D

also fails to present evidence that create a genuine dispute of material fact that F&D is the

beneficial owner of the relevant exclusive right. Thus, that argument is similarly rejected. F&D

also argues that based on a reservation of rights in the distribution agreement with Vertical and in

a separate addendum to the agreements, F&D has standing. This argument also is without merit.

A. Evidentiary Objections

As a threshold matter, F&D objects on relevancy grounds to three exhibits submitted by

Defendant, Exhibits B, C, and D. Defendant concedes that Exhibit D may be disregarded.

Accordingly, F&D’s objection to Exhibit D is sustained. The Court overrules F&D’s objection to

Exhibit C. Exhibit C is an “Anti-Internet Piracy Authorisation” agreement dated April 1, 2015, in

which F&D empowers Voltage with a limited power of attorney to investigate and collect

evidence relating to copyright infringers of Fathers & Daughters, decide whether to file

lawsuits, choose counsel, decide on settlement, and make other related decisions. ECF 36-3. This

document is relevant to Defendant’s argument that a later Anti-Piracy Addendum relied on by

F&D was created after this lawsuit was filed. The Court also overrules F&D’s objection to

Exhibit B, the sales agency agreement. Exhibit B is relevant because it establishes Goldenrod’s

authority to enter into the licensing agreement with Vertical that provides Vertical with the

exclusive license to the relevant rights in Fathers & Daughters. It is also relevant to the financial

relationship between Goldenrod and F&D, which is relevant to F&D’s argument regarding

beneficial ownership.

B. Standing as the Legal Owner

The legal owner of a copyright has standing. F&D argues that it is the legal owner

because it registered the copyright and the copyright remains registered in its name. This

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simplistic view of ownership of a copyright misunderstands that copyright “ownership” can be

transferred through an exclusive license (or otherwise), and can be transferred in pieces.

Righthaven, 716 F.3d at 1170; see also 17 U.S.C. § 101.

In the sales agency agreement, F&D authorized Goldenrod to license F&D’s exclusive

rights in Fathers & Daughters. In the distribution agreement, Goldenrod granted to Vertical a

license in many of the exclusive rights of Fathers & Daughters as enumerated under copyright

law. The first question is whether F&D, through Goldenrod, granted Vertical an exclusive

license, which is a transfer of ownership, or a nonexclusive license, which is not a transfer of

ownership. See 17 U.S.C. § 101.

The agreement is clear that Vertical was granted an exclusive license for the rights that

were transferred. It is true that not all rights were transferred to Vertical, but under the Copyright

Act of 1976, a copyright owner need not transfer all rights. See Minden, 795 F.3d at 1002 (“The

Copyright Act, however, eradicated much of the doctrine of indivisibility by permitting a

copyright owner to transfer [a]ny of the exclusive rights comprised in a copyright, including any

subdivision of any of the[se] rights, to someone else.” (alterations in original) (quotation marks

and citation omitted)). The copyright owner may also “subdivide his or her interest” in an

exclusive right by transferring “his or her share ‘in whole or in part’ to someone else.” Id.

(quoting 17 U.S.C. §201(d)(1)).

The critical inquiry is to consider whether the substance of the rights or portions of rights

that were licensed were exclusive or nonexclusive. Vertical plainly received exclusive rights.

Vertical received the exclusive right to “manufacture, reproduce, sell, rent, exhibit, broadcast,

transmit, stream, download, license, sub-license, distribute, sub-distribute, advertise, market,

promote, publicize and exploit the Rights and the Picture and all elements thereof and excerpts

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therefrom” in the United States and its territories for almost all distribution outlets, except

airlines and ships. This constitutes an exclusive license.

An exclusive license serves to transfer “ownership” of a copyright during the term of the

license. Righthaven, 716 F.3d at 1170; see also 17 U.S.C. § 101. Thus, for the exclusive rights

licensed to Vertical, Vertical is the “legal owner” for standing under the Copyright Act, and not

F&D. F&D argues that because it did not license to Vertical all of its rights in Fathers &

Daughters, including rights to display the movie on airlines and ships, rights to the movie clips,

and rights to stock footage, F&D remains the legal owner of the copyright with standing to bring

this infringement claim. F&D misunderstands Section 501(b) of the Copyright Act.

As Section 501(b) states, and the Ninth Circuit has made clear, after a copyright owner

has fully transferred an exclusive right, it is the transferee who has standing to sue for that

particular exclusive right. See 17 U.S.C. § 501(b); Righthaven, 716 F.3d at 1170; see also

Ginsburg, supra, at Ch. 3.II.A (noting that if a copyright owner licenses an exclusive right to

another, it is the licensee of the exclusive right “who can properly bring an action for

infringement of that particular exclusive right”). The copyright owner need not transfer all of his

or her exclusive rights, and will still have standing to sue as the legal owner of the rights that

were not transferred. See Minden, 795 F.3d at 1004-05; see also DRK Photo, 80 F.3d at 984. But

the copyright owner no longer has standing to sue for the rights that have been transferred. See

Righthaven, 716 F.3d at 1170 (“[I]f a copyright owner grants an exclusive license of particular

rights, only the exclusive licensee and not the original owner can sue for infringement of those

rights.” (emphasis added)); see also 17 U.S.C. § 501(b) (““The legal or beneficial owner of an

exclusive right under a copyright is entitled . . . to institute an action for any infringement of that

particular right committed while he or she is the owner of it.” (emphasis added)); 3 M. Nimmer

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& D. Nimmer, NIMMER ON COPYRIGHT § 12.02[c] (2017) (“Once the copyright owner grants an

exclusive license of particular rights, only the exclusive licensee, and not his grantor, may sue for

later-occurring infringement of those rights. Indeed, the licensor may be liable to the exclusive

licensee for copyright infringement, if the licensor exercises rights that have theretofore been

exclusively licensed.”).2

The second question in this case is whether the exclusive rights transferred to Vertical,

and for which Vertical is thus the “legal owner,” include the rights at issue in this lawsuit. This

lawsuit claims that Defendant illegally downloaded Fathers and Daughters over the internet, via

a computer, using BitTorrent software. This squarely falls within the digital rights exclusively

licensed to Vertical in Paragraph 7(a)(v) of the distribution agreement. Defendant is a “member

of the public” who allegedly obtained the movie “via the internet, ‘World Wide Web’ or any

other form of digital, wireless and/or Electronic Transmission . . . and/or other non-tangible

delivery or fixed and mobile devices, platforms and services, whether now known or hereafter

devised,” and the movie was allegedly transmitted via “electronic and/or data transmissions or

2
The Ninth Circuit may have created some confusion in this analysis with Minden’s
holding that in an agreement where the copyright holder expressly retains legal ownership: (1) a
copyright owner can retain some “limited degree” of an “exclusive right,” (2) a copyright owner
can license the remaining portion of that “exclusive right” to another, and (3) the licensee would
have standing to sue as the recipient of an exclusive license of the right transferred to the
licensee. Minden, 795 F.3d at 1004-06; see also DRK Photo, 80 F.3d at 984 (describing the
holding in Minden). The ability of an “exclusive right” to be held fractionally between two
parties seems to be contrary to the meaning of “exclusive”—and contrary to Righthaven’s
holding and the leading treatises’ conclusions that after an exclusive right has been transferred
only the licensee and not the owner can enforce that exclusive right. The Court, however, need
not address that tension here because Goldenrod did not retain any portion of the exclusive rights
it licensed to Vertical. Accordingly, that aspect of Minden is inapplicable to the case at bar.
Although Goldenrod did not license certain rights (such as display and distribution to airlines),
for the rights that were licensed, they were licensed in their entirety and thus served as a transfer
of ownership of the copyright for those exclusive rights. Moreover, the distribution agreement
did not contain a clause expressly retaining copyright ownership to F&D (as did the agreement at
issue in Minden).

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streaming or downloads or embeds, including, without limitation, transmissions or downloads

via IP protocol, computerized or computer-assisted media.” ECF 36-5 at 4 (¶ 7(a)(v)). The

alleged violation also includes illegally viewing the movie in the United States, which is the

exclusive broadcast territory of Vertical, except for airplanes and oceanliners, which are not

relevant to this lawsuit.

F&D also argues that because Paragraph 7(d) of the distribution agreement requires

Vertical to use commercially reasonable efforts to ensure that its internet distribution and

streaming were limited to the contract territory (the United States and its territories), were on a

closed network, and were only accessible to networks prohibiting circumvention of digital rights

management security and other digital security, this means that the contract reserved BitTorrent

rights to Goldenrod. That is not, however, what Paragraph 7(d) provides. Paragraph 7(a) of the

distribution agreement grants Vertical extremely broad rights, including comprehensive digital

rights. Paragraph 7(b) grants Vertical the right to authorize others to the rights of Fathers and

Daughters. Paragraph 7(c) reserves certain rights to Goldenrod, not relevant here. Finally,

Paragraph 7(d) merely reaffirms that certain digital rights belong to Vertical and then applies

commercially reasonable requirements to Vertical’s exercise of those rights, primarily security

terms. Paragraph 7(d) does not reserve any exclusive copyright digital rights to Goldenrod.

Under the Copyright Act, F&D is not the “legal owner” with standing to sue for

infringement relating to the rights that were transferred to Vertical through its exclusive license

granted in the distribution agreement. These rights include displaying or distributing copies of

Fathers & Daughters in the United States and its territories. They further include displaying or

distributing via the internet, using IP protocol, using computers, and using “all other

technologies, both now or hereafter known or devised,” which includes using BitTorrent

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protocol. In the distribution agreement Goldenrod (and therefore F&D) did not retain any

fraction or portion of these digital rights. Because the infringement in this case relates to rights

transferred to Vertical and there is no alleged infringement relating to display on airlines, display

on ships, movie clips, stock footage, or any other rights that F&D retained, F&D does not have

standing as the legal owner to bring the claims alleged.

C. Standing as the Beneficial Owner

A beneficial owner of a copyright may also have standing. F&D argues that it has

standing as the beneficial owner of the copyright because it receives royalties for the licensing of

the movie to Vertical. In support, F&D summarily asserts that the distribution agreement with

Vertical states that F&D is entitled to “Licensor Net Receipts” from Vertical. The problem with

this argument is that the “Licensor” in the distribution agreement is Goldenrod, not F&D. So it is

Goldenrod who is entitled to those net receipts from the distribution agreement. F&D offers no

argument or evidence of how the money Goldenrod receives from Vertical qualifies as royalties

payable to F&D. Courts have “no independent duty ‘to scour the record in search of a genuine

issue of triable fact,’ and may ‘rely on the nonmoving party to identify with reasonable

particularity the evidence that precludes summary judgment.’” Simmons v. Navajo Cty.,

Ariz., 609 F.3d 1011, 1017 (9th Cir. 2010) (quoting Keenan v. Allan, 91 F.3d 1275, 1279 (9th

Cir. 1996)).

Nonetheless, the Court has reviewed the sales agency agreement to see if it elucidates

how Goldenrod’s receipts from Vertical might be payable as royalties to F&D. The sales agency

agreement provides that Goldenrod may enter into license agreements and collect monies in its

own name. Thus, Goldenrod may collect the monies from Vertical in Goldenrod’s name. The

sales agency agreement also provides, however, that monies obtained from licensing the movie

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shall be deemed “Gross Receipts.” As described in the factual background section, the first eight

steps in distributing Gross Receipts could not be considered royalties to F&D.

It is conceivable that in the final step, after the monies become “adjusted gross receipts,”

there may be some type of distribution that might be considered royalties to F&D. That entire

section, however, is redacted in the copy provided to the Court. Thus, there is no way for the

Court to know whether the adjusted gross receipts are divided in such a manner that could be

considered royalties to F&D. F&D did not provide the Court with an unredacted copy or any

evidence showing how F&D can be deemed to be receiving royalties. The Court would have to

engage in pure speculation as to how adjusted gross receipts are divided, and the Court will not

do so. Accordingly, there is no evidence before the Court that F&D receives anything from the

sales agency agreement that looks like royalties, let alone that F&D receives royalties from the

distribution agreement with Vertical. F&D therefore fails to show a genuine dispute that it is the

beneficial owner with respect to the exclusive rights licensed to Vertical.

D. Contractual Reservation of Right to Sue Clause

F&D also argues that because the distribution agreement between Goldenrod and Vertical

contained a reservation of the right to sue for infringement via BitTorrent and other illegal

downloading via the internet, F&D has standing to sue. This argument fails for two reasons.

First, the reservation of rights was to Goldenrod and not to F&D. Thus, even if the clause could

convey standing, it does not convey standing to F&D.

Second, the Ninth Circuit has repeatedly held that agreements and assignments cannot

convey simply a right to sue, because a right to sue is not an exclusive right under the Copyright

Act. See DRK Photo, 870 F.3d at 987-88; Righthaven, 716 F.3d at 1169-70; Silvers, 402 F.3d

at 890. If a party cannot transfer a simple right to sue, the Court finds that a party similarly

cannot retain a simple right to sue. Just as Goldenrod (or F&D) could not assign or license to
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Vertical or anyone else no more than the right to sue for infringement, it cannot transfer the

substantive Section 501(b) rights for display and distribution in the United States and its

territories, including digital rights, but retain only the right to sue for one type of infringement of

those transferred rights (illegal display and distribution over the internet).

E. Anti-Piracy Addendum

F&D also relies on an undated “Anti-Piracy and Rights Enforcement Reservation of

Rights Addendum.” ECF 36-7. This document provides that “all peer-to-peer digital rights

(BitTorrent, etc.) in the Picture, including international rights, are reserved to [F&D],” that F&D

shall be authorized to issue Digital Millennium Copyright Act take down notices against any

infringer, that F&D shall be authorized to “enforce copyrights against Internet infringers

including those that use peer-to-peer technologies in violation of U.S. Copyright law,” and that

there shall be no cost to Vertical with regards to these enforcement actions. This document does

not provide F&D with standing for two reasons.

First, the Ninth Circuit instructs courts in considering copyright assignments and

agreements to consider substance over form. See DRK Photo, 870 F.3d at 986-87;

Righthaven, 716 F.3d at 1169-70. From the context of this document, it is clear that the peer-to-

peer and BitTorrent rights being reserved to F&D are infringing rights. The substance of this

Addendum is to confer no more than the right to issue take down notices and sue for copyright

infringement for infringing peer-to-peer use through illegal downloading via the internet. The

rights to digital display and distribution, which are exclusive rights under the Copyright Act,

remain with Vertical. Accordingly, these “reserved” rights are not exclusive rights under the

Copyright Act and thus do not confer standing.

Second, F&D provides no evidence in the record that this document was executed before

this lawsuit was filed. As discussed above, F&D did not have any digital rights in Fathers &
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Case 3:16-cv-01443-SI Document 46 Filed 01/17/18 Page 16 of 17

Daughters in the United States and its territories and thus did not have standing. Even if this

document could provide F&D with rights that would confer standing upon F&D, standing is

considered at the time a lawsuit is filed. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 569

n.4 (1992). Although there are a few exceptions to this rule, as the Ninth Circuit noted in

Righthaven, “permitting standing based on a property interest acquired after filing is not one of

them.” 716 F.3d at 1171. In Righthaven, the Ninth Circuit declined to decide whether a late

contractual addendum to “clarify” copyright assignments “call[ed] for a new exception to the

general rule.” Id. Instead, the court found that the plaintiff lacked standing either way. Under

existing Ninth Circuit precedent, there is no such additional exception to the general rule.

In his motion, Defendant expressly noted that the anti-piracy addendum was undated,

produced near the end of discovery, and “upon information and belief” was created after this

lawsuit was filed. Notably, no other agreement in the record is undated. Additionally, in

April 2015, several months before the distribution agreement was executed in October 2015, an

anti-piracy agreement that was signed and dated authorized Voltage to investigate and pursue

infringers, not F&D.

In its response, F&D did not dispute that the undated anti-piracy addendum was created

after this lawsuit was filed, or otherwise respond to Defendant’s standing argument relating to

the untimeliness of this document. Nor did F&D provide any evidence as to the date this

document was created. Therefore, the only reasonable inference is that this document was

created after this lawsuit was filed. Accordingly, because the only reasonable inference

supported by the evidence is that this document was created after the filing of this lawsuit, it is

not appropriate to consider for purposes of standing.

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Case 3:16-cv-01443-SI Document 46 Filed 01/17/18 Page 17 of 17

F. Informal Request to Amend

At oral argument, Plaintiff’s counsel requested leave to amend to add additional plaintiffs

if the Court were “inclined” to grant Defendant’s motion. Summary judgment is not the time to

amend pleadings. See, e.g., Navajo Nation v. U.S. Forest Serv., 535 F.3d 1058, 1080 (9th

Cir. 2008) (finding that when allegations are not in the complaint, “raising such claim in a

summary judgment motion is insufficient to present the claim to the district court”); Wasco

Prods., Inc. v. Southwall Techs., Inc., 435 F.3d 989, 992 (9th Cir. 2006) (“‘Simply put, summary

judgment is not a procedural second chance to flesh out inadequate pleadings.’”) (quoting

Fleming v. LindWaldock & Co., 922 F.2d 20, 24 (1st Cir.1990)); Pickern v. Pier I Imports (U.S.),

Inc., 457 F.3d 963, 968-69 (9th Cir. 2006) (new issues raised in response to summary judgment

were not appropriate for consideration). Plaintiff’s informal request to amend is denied.

CONCLUSION

Defendant’s Motion for Summary Judgment (ECF 34) is GRANTED. Plaintiff’s claims

are dismissed for lack of standing.

IT IS SO ORDERED.

DATED this 17th day of January, 2018.

/s/ Michael H. Simon
Michael H. Simon
United States District Judge

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